The Chinese music streaming market is facing “industry chaos” due to platforms allowing masses of copyright-infringing, AI-made tracks to fill up their catalogs.
That’s the verdict of Tencent Music Entertainment‘s Executive Chairman, Cussion Pang, and CEO, Ross Liang, delivered during TME‘s Q1 2026 earnings call on Tuesday (May 12).
Their comments represent one of the most direct warnings yet from industry leaders over the damage AI-generated content is doing to streaming subscription businesses in China.
Liang accused competitors of using infringing AI content “to quickly fill their music libraries” in a bid to attract users – a charge that carries particular weight in China, where TME faces intensifying competition from ByteDance‘s Soda Music and NetEase Cloud Music.
The remarks came as TME reported that its membership services revenue dipped slightly on a quarter-over-quarter basis in Q1 2026, to RMB 4.57 billion (USD $662 million), despite growing 6.6% YoY.
In his prepared comments, Pang suggested rivals offering copyright-infringing content was a key factor in the slowdown.
Pang told analysts that the “proliferation of unauthorized AI-generated content… creates headwinds for our music subscription growth” and “undermines creators’ rights and dilutes the long-term value of the music ecosystem as a whole.”
“In response, we are working closely with creators, rights holders and regulators to lead and champion robust copyright protection efforts,” Pang said.
“Today, we are more convinced than ever that original human creativity and premium music IPs are the ultimate differentiators.”
During the Q&A portion of the call, Pang‘s tone sharpened considerably.
He told analysts that “disorderly price competition within the industry, coupled with the rampant issue of pirated content driven by AI, has introduced uncertainties regarding the future revenue growth of traditional streaming services.”
Pang called for “strengthening enforcement to prevent AI from becoming an excuse for infringement.”
“In response to industry chaos, we have established a dedicated rights protection mechanism to resolutely safeguard the legal interests of our platform, copyright owners and creators,” he said.
“We welcome tech innovation, but we’ll do everything in our power to suppress ‘song-washing’ and other infringing behaviors.”
“We welcome tech innovation, but we’ll do everything in our power to suppress ‘song-washing’ and other infringing behaviors.”
Cussion Pang, TME
Pang‘s reference to “song-washing” echoes terminology TME has used to categorize a growing enforcement challenge.
Last week, MBW reported that TME‘s 2025 ESG report revealed that the company removed over 250,000 policy-violating songs and reviewed more than 600,000 cases involving “high-risk copyright content” across its platforms last year – with TME citing “emerging AI risks” as a growing area of concern.
In that report, TME disclosed that it took down over 27,000 songs specifically involved in what it categorizes as “song theft,” “song laundering,” and “trend hijacking” – three forms of “gray-market” manipulation that the company says are “becoming increasingly covert and complex.”
TME defines “song laundering” as the plagiarism or alteration of existing music works – a practice that, on Tuesday‘s earnings call, its leadership made clear is now being accelerated by AI tools.
CEO Ross Liang was more direct still when a Morgan Stanley analyst flagged the quarter-over-quarter dip in membership services revenue.
Liang said: “Some [TME] competitors are using AI to quickly fill their music libraries and [using an] aggressive strategy to divert traffic and users into their platform, and they’re also fighting for ‘light’ users.”
(Liang’s reference to ‘light’ users refers to low-engagement, lower-tier subscribers – users on free or ad-supported plans who, as he noted elsewhere on the call, TME is trying to retain through “freemium and ad memberships.”)
“Some [TME] competitors are using AI to quickly fill their music libraries and [using an] aggressive strategy to divert traffic and users into their platform.”
Ross Liang, TME
The competitive pressure from Soda Music in particular prompted Macquarie to downgrade TME from Outperform to Neutral in March, citing threats to ARPPU and user acquisition – with Morgan Stanley, Benchmark and UBS issuing further downgrades in the weeks that followed.
Liang called the practice of stuffing streaming catalogs with AI music “an exhaustion of the economic value of this industry,” adding that such competitors “are consuming their own business value.”
Liang said the Q-o-Q membership softness was “mainly because of the competition on the music streaming business and especially for those free and ad-supported members.”
Users on TME‘s Kugou platform, Liang said, are “more price-sensitive and promotion-sensitive” and, in the face of multiple choices, “easily flowing away.”
TME‘s flagship QQ Music service, by contrast, was described as “relatively more comprehensive,” with operational data that is “steady and healthy.”
TME‘s wider Q1 2026 results showed total revenues of RMB 7.90 billion (USD $1.15 billion), up 7.3% YoY, with music-related services revenue growing 12.2% YoY to RMB 6.51 billion.
Non-IFRS net profit attributable to equity holders was RMB 2.27 billion (USD $330 million), up 7.0% YoY.
The view from the West
The tone from TME‘s leadership stands in notable contrast to the prevailing narrative from some Western music industry executives.
At the HumanX conference last month, Universal Music Group‘s EVP and Chief Digital Officer, Michael Nash, pushed back against what he called the “false narrative of artist replacement” by AI, arguing that “a nuclear explosion in production volume of content through AI doesn’t have a market.”
Believe founder and CEO Denis Ladegaillerie, meanwhile, recently told MBW that AI-generated content accounts for “less than 0.5%” of total streams across the industry – and that its impact on the actual business “is largely a non-issue.”
For TME, though, the impact is evidently not a non-issue – it is being cited as a direct headwind to paying subscriber growth at China‘s largest music streaming company.
That distinction may reflect the different competitive and regulatory landscapes between the Chinese and Western music markets.
As Citi analysts noted following TME‘s Q4 2025 results in March, the AI content issue is “particularly severe” in China, where short-video platforms already challenge traditional music streaming and where clear regulations around AI-generated music copyright remain absent.
In TME‘s press release accompanying the Q1 2026 results, Pang struck a more measured tone, stating: “While AI is broadening participation in content creation, it does not replace human creativity and, in many ways, reinforces the scarcity and intrinsic value of premium IP.”
On the earnings call, though, the gloves came off.Music Business Worldwide
